Is Buy to Let as Lucrative as it Used to be?

Very few of us know anybody who has won the jackpot on the National Lottery but most of do know somebody who has lost their company pension overnight or have paid into an endowment policy only for the company to announce that the policy has underperformed and they will be left short.

Due to these issues many people decide to take a more direct approach to securing their retirement and enter into the Property Investment market. For the majority of those who aren't seasoned investors Buy To Let is the most popular form of investment property as the perceived risks are low and the return is planned over a longer term, but is Buy To Let as lucrative as it used to be?

During the recent property price rise virtually every house price has gone through the roof so it didn't matter what property you owned you would receive good capital appreciation, which is what matters when you are looking for the long term investment. Now though, the market is not able to support large rises as individuals are now taking a mortgage calculated on five or six times their annual income instead of two and a half as was the norm as little as 10 years ago. This does not mean that all is lost for the property investor though; it just means that they have to be cleverer and purchase a property that has been thoroughly researched and gone through the relevant checks.

Firstly you would need to make sure that your mortgage is more than covered by the rental income. A Buy to Let property requires a deposit to buy, 15% is the norm but the ongoing costs should be borne by the tenant in their rent. You should be receiving 30% more than your mortgage outgoings per month, put this into an account to use to pay for repairs and to pay the mortgage when the property is empty. This will leave you free to reap the capital appreciation as your return on investment.

To do this productively you will need to buy in an area that will have infrastructure regeneration which will lead to job creation and a more desirable housing environment. Recent successful examples of this have been Hull, Doncaster and Castleford where house prices have risen sharply above the national average. If you are looking for low value Buy to Let look for areas where low paid jobs are being created, a Superstore opening and having a requirement for shelf stackers and checkout staff or other bulk inward investment from employers.

Is Buy to Let as lucrative as it used to be? It can be, but now you have to select your investment much more carefully. Just make sure that you do you Homework

Happy House Hunting.